What ethical standard is violated when appraisers are paid based on a percentage of property value?

When appraisers are compensated based on a percentage of the property value, it directly impacts their independence, which is a critical ethical standard in the appraisal process. Independence is crucial because an appraiser must provide an unbiased estimate of property value, free from influence by those who might benefit from a higher appraisal. Compensation tied to the value of the property creates a conflict of interest, as it may incentivize the appraiser to inflate values in order to increase their fee.

This violation undermines the reliability of the appraisal process, leading stakeholders to question the integrity and objectivity of the appraisal results. Maintaining a fee structure that is fixed and does not fluctuate with property value is essential to uphold the independence of an appraiser, ensuring that they can provide an accurate and impartial assessment based on market data and comparable properties rather than a financial incentive.